Saskatchewan Premier Brad Wall may be in violation of trade agreements by inviting energy companies based in Calgary to move their headquarters to the province.
In a letter to Whitecap Resources on Monday, Wall offers to subsidize relocation costs, trim taxes and royalties and help find space in unused government buildings if the oil and gas firm moves to Saskatchewan.
Further incentives Wall mentions includes reductions to corporate and personal income taxes promised in the provincial budget and that the Saskatchewan government has no intention of implementing a carbon tax.
However, Alberta Premier Rachel Notley argues Wall’s invitation may be violating the New West Partnership Trade Agreement and the Agreement on Internal Trade.
“It is actually a breach of a trade agreement and that trade agreement actually promotes back and forth business operations that contribute to prosperity on both sides of the border,” Notley said. “You don’t touch one without pulling a really large string.”
READ MORE: Rachel Notley slams Brad Wall’s attempt to lure energy companies to Saskatchewan
The New West Partnership Trade Agreement, which is an internal trade agreement between Manitoba, Saskatchewan, British Columbia and Alberta, states that parties cannot directly or indirectly provide business subsidies that “provide an advantage to an enterprise that results in material injury to a competing enterprise of another party” or “entice or assist the relocation of an enterprise from another party.”
Under the federal Agreement on Internal Trade, which was signed by First Ministers in 1994, states under the code of conduct on incentives, a government is prohibited from offering incentives that “entice a business to relocate in that province or territory.”
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Wall said he is not violating the New West Partnership Trade Agreement but is instead letting companies know about existing policies.
“We haven’t got a specific relocation program we’re putting in the window that we’ve developed that would be counter to the spirit of those trade deals,” Wall said.
Wall said Saskatchewan already has new growth tax incentives for companies that are creating new corporate office jobs or bringing new corporate office jobs to the province.
“That’s what a new growth tax incentive might achieve,” Wall said.
“A new growth tax incentive related to the number of new jobs they bring, they could use it for whatever. They could use that to perhaps toward the cost of relocation.”
He also added in the latest budget, the government has a plan to reduce corporate tax rates and personal income taxes, as well as create the lowest manufacturing rate in the country.
“We’re going to tell that story. We’ve been doing this for a long time,” Wall said.
Saskatchewan royalties can reflect an advantage to relocating head office to the province, Wall said.
“We actually implemented these royalty changes and incentives for head office jobs rather than them just taking the product out of here,” Wall said.
Before Wall sent the letters out, he did not consult legal counsel.
“I’ve done this since I was elected. This is my job to try to attract permanent new jobs to the province and try to improve the corporate presence,” Wall said.
“We have had those in place in the time of the New West Partnership. They’ve been in place now as we negotiated a new agreement on trade nationally.”
The Saskatchewan government also said jurisdictions across Canada offer different incentives and they are “confident our ongoing efforts to attract business and investment to Saskatchewan are within the provisions of the New West Partnership.”
While responding to Wall’s plans on Thursday, Alberta Premier Rachel Notley said it wasn’t necessarily the “wisest approach,” and said his efforts could be in violation of the New West Partnership and the Agreement on Internal Trade.
“If I was a business owner that resided in a smaller market, say Saskatchewan that depended on an agreement that gave me access to a bigger market say Alberta, I would be very concerned by a leadership that was taking swings at the very trade agreement that gave my business access to that larger market,” she said.
Ken Rasmussen, a Johnson Shoyama Graduate School of Public Policy professor who is based in Regina, said Wall’s actions are a violation of “the spirit and the letter; of the New West Partnership.
“The real losers here are taxpayers who get caught in a bidding war between provinces using taxpayer money to bribe business. A very bad development.”
Notley said Alberta will be reviewing the trade agreements and will discuss how to respond to Wall.
— With files from David Baxter
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